Idle Capital May be Disappointed with Potential Recession
LEHI, UT, September 10, 2019 —
With headlines blaring news of slowing economic growth, trade wars, and inverted yield curves, investors await eagerly with deployable capital for what may prove to be a less dramatic recession than anticipated.
A recent article from globest.com indicate market fundamentals point to a mild correction, especially compared to the recent Great Recession. The first point supporting a mild recession is the lack of over-leverage in the market, signaling that there will be fewer forced sellers in the next recession.
Another point mentioned was the sheer amount of capital ready to deploy. There appears to be nearly 2 times the amount of capital available today than there was in 2007, indicating a sentiment of potential "buy low" investors hoping for large amounts of opportunity in the next recession.
These two points - lower likelihood of foreclosures in the next recession, and larger amounts of deployable capital in the market - indicate that investors may be disappointed with the level of opportunity that was available in the previous recession. Less foreclosures coupled with ready-to-deploy capital will make for an incredibly competitive market, even in a downturn.
Considering this, investors may be at a disadvantage sitting on capital waiting to make a fortune in the next recession.